The United States, along with most of the developed world, is only getting older. Data from the Pew Research Center shows that 10,000 Baby Boomers began turning 65 each day in 2010 and that pace will continue until 2029. That trend is critically important to the American economy for a number of reasons. For one, with the Boomers accounting for about a quarter of the U.S. population, leaving fewer workers to support a growing number of retirees.

The growing cohort of senior citizens is also reshaping the American economy. Health care expenditures currently account for 18% of our gross domestic product (GDP) and are expected to reach 20% by 2021. If you push the projection further out, you get to 34% in 2040. By that year, spending by Medicare and Medicaid will rise to almost 15% of GDP.

Setting aside the impact of that spending trend on government budgets, soaring health care spending is a huge opportunity for investors. All of that money has to go somewhere, and that somewhere will be the bottom lines of the companies providing the goods and services involved in care.

Our resident small-cap expert Jim Fink has identified one company which looks particularly promising, Exactech Inc. (NASDAQ: EXAC).

A maker of orthopedic implant devices such as artificial knees and shoulders, the company was founded in 1985 by an orthopedic surgeon who was fed up with using devices designed by people who had never actually put one in. His goal was to design products that were not only easier for the surgeons to us, but which also improved patient outcomes and resulted in better mobility.

Back in the mid-1980s, the orthopedic implant field was in its infancy, with relatively few joint replacement operations performed on a regular basis. Since then, though, as products have become more advanced and surgeons more experienced in the field, the number of annual replacement operations has grown to more than 1 million each year. As those procedures have become more common, Exactech’s business has grown rapidly.

For instance, the company’s Equinoxe Shoulder System provides surgeons with the flexibility to make the best decisions for their patients even as they operate. As a result, studies have shown that the system can save hospitals thousands of dollars in reduced operating room time even as patients enjoy less pain and faster healing times. Needless to say, Exactech has sold more than 60,000 shoulder implants since the product was introduced a decade ago. And that’s just one of dozens of products.

Given the popularity of the company’s products, revenue growth at the company has average an impress 12.7% over the past decade. While that’s down from the nearly 26% revenue growth the company saw in 2004, it demonstrates that it can hold its own in a highly competitive environment against the likes of Zimmer Holdings (NYSE: ZMH) and Stryker Corp (NYSE: SYK).

That, in turn, has helped fuel steady growth in profitability, with earnings per share growing at an annualized 7% since 2004.

That’s not a bad margin for a company that typically spends better than 6% of its revenue on research and development. It’s also not shy about acquiring companies with complementary products and services. Exactech announced in January that it had acquired BlueOrtho SAS, a European company which developed computer-assisted surgical technologies. The company had been working in partnership since 2009, jointly developing the ExactechGPS Guided Personalized Surgery System and introducing it in 2010. Given the shared history between the two companies, the acquisition makes terrific sense and will allow Exactech to roll out the system for a variety of produces beyond its current use in knee replacements.

Given the company’s diversity of popular products and growing demand, Exactech’s EPS is expected to grow an average of about 8% over the next five years. On top of that, with a market capitalization of just $310 million, the company could be an attractive takeover target for one of its larger competitors.

While Jim rates Exactech one of his ‘best buys,’ it’s just one of a handful of health care companies that he follows in Roadrunner Stocks. His health care picks are also sitting on some sizable gains – better than 70% in some cases – with plenty of upside remaining thanks to the graying of America’s population. Exactech is a buy up to 26.